In today’s trading, Wednesday (10/2/2021) the world gold price has increased. Fiscal stimulus plans for the United States have seen this precious metal rise in price. Rumor says that Tesla will start buying gold after this electric car manufacturer buys up bitcoins.
Last week, Congress approved the US $ 1.9 trillion stimulus proposal from President Joe Biden’s administration. It is likely that the stimulus could start rolling in a matter of weeks.
The stimulus will increase liquidity in the economy. The abundant supply of US dollars due to the loose monetary policy adopted by the US central bank, The Fed, caused the greenback to depreciate against other currencies.
Market participants began to anticipate high inflation due to a flood of fiscal and monetary stimuli. Investors are also looking for alternative assets that can protect their wealth from erosion due to inflation.
Gold is one of them. In contrast to fiat currency which can be printed at any time and in any amount (although not arbitrary), the supply of gold is relatively more stable, so it is suitable to be used as an asset for hedging.
Slowly the price of gold began to creep up. In the spot market arena, the world gold price has reached US $ 1,840 / troy ounce, up 0.17% compared to yesterday’s closing position. Now the price of gold is getting closer to the psychological level of US $ 1,850 / troy ounce.
Tesla Begin to Look to Gold
Not only investors are looking to gold, corporations such as Tesla Inc are also interested in this yellow metal. Tesla recently announced it was buying Bitcoin worth US $ 1.5 billion for hedging and plans to use it for transactions.
In its report to the Securities Exchange Commission (SEC), Tesla Inc also mentioned another asset, namely gold. The company that produces the electric car is trying to convert its cash in fiat currency into alternative assets.
“We can invest some of the cash in certain alternative reserve assets including digital assets, gold bullion, gold-based exchange traded funds and other assets as determined in the future,” the company said in a report to the Stock Exchange Commission (SEC).
Even to the point of setting a new record above US $ 40,000 per chip. The high Bitcoin price increase also indicates speculative action by the market.
In the midst of abundant liquidity and improving risk sentiment, market players are more aggressively targeting riskier assets that provide thicker leverage, such as stocks and cryptocurrencies. This is the reason why gold prices tend to be depressed apart from the rebound in the US dollar.